jobs are going to come back slowly.
4. public debt: Public debt in the U.S.
— including national, state and municipal debt — is a large and encompassing problem without a readily
apparent solution. It almost certainly
will affect the commercial real estate market in the next few years.
The country must start paying off its
debt burden soon, and there are only
a few ways to handle that — likely a
combination of printing money, raising personal and corporate taxes,
and cutting services. The problem
is that the less money a corporation
has to reinvest in its own business,
the more its expansion and other
growth initiatives are hindered.
5. real wage growth: This is a critical category that doesn’t receive
enough attention. Real wage growth
is adjusted for inflation. From 1979
to 2007, inflation-adjusted hourly
wages have increased by only 0.1
percent annually, according to the
Economic Policy Institute. In a consumer-driven economy, how can
consumers continue to go to the
malls and to auto dealerships and
buy nonessential items when they
don’t have the funds to do so? Spurring the economy with purchases
must be prefaced by increasing
wages. This is a large question mark
heading into 2011 and beyond.
Although many factors must improve
« FAC TORS continued from page 24
to recover from the economic downturn, there are bright spots and areas
for growth in the commercial real estate
market. Some prospects for brokers to
• u.s. small business administration
(sba) loans or other business loans
not collateralized by real estate:
Commercial brokers should be up-to-speed with these programs and
should work with an SBA lender that
can help their clients, and in turn
help brokers increase their income.
• u.s. department of housing and urban development (hud) loan programs: Many people believe that HUD
or some other federal agency must
step up to the plate and get more involved in commercial financing via
guarantees and securitization. The
35-year, fixed-rate apartment-build-ing mortgage HUD offers is a way for
property-owners to lock in a low interest rate and not have to worry about
the costs of refinancing. HUD also insures various types of assisted-living,
senior-housing, and health-care and
• other new commercial mortgage
programs: There are always new and
innovative financial mechanisms and
loan structures being developed and
offered. In a down climate, brokers
must be the point-person for former
and current clients. Brokers should
know what’s new and what might be
of some help to those in need.
• commercial loan modifications and
workouts: There has been a lot of
bad press about loan mods and
workouts, but there is money to be
made in salvaging distressed and delinquent commercial mortgages. This
has become an increasingly large
niche in the past 18 months.
• hard money: As bank lending has
gotten tighter — and as borrowers
still seek funds for commercial property acquisitions and development
projects — hard money has been a
more prudent alternative for many.
A number of hard-money lenders use
it as a tool alongside conventional
• business incubators: This is a marketing niche you should focus on
in these tough times. Many incubators are quasi-public operations that
provide cheap and practical means
of helping entrepreneurs get off the
ground. Most are regional; some may
be affiliated with national groups. In
any case, these incubators could
lead to the successful local businesses of tomorrow.
• fledgling or brand-new industries:
Despite widespread bad news, a new
industry will likely emerge and grow
strong in the next two to three years.
What it might be is unknown to most,
if not all, of us. As it grows, however,
it will create jobs along with new facilities and work environments. Brokers who remain on the lookout and
On the Web
• For the U.S. Bureau of
Labor Statistics’ (BLS’) list
of the industries with the
largest predicted wage and
salary growth from 2008
through ’ 18, see sctsm.in/
• For the BLS’ list of the
industries with the largest predicted wage and
salary declines from 2008
through ’ 18, see sctsm.in/
identify emerging industries in the
early stages can reap the rewards.
There are many things to be concerned about in commercial real estate.
Many of the professionals who succeed
during and after the current downturn,
however, are the same people that succeeded in the last one — or at least the
same type of people. They’re creative.
They’re diligent. And they’re often a little more cautious and quite a bit more
aware than those who fail.
By looking at where we’ve been, brokers can get a better sense of where
we’re headed and better position themselves moving forward. •
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